Industry seeks pause in interest rate hikes

Industry today sought government intervention, asking it to announce measures to revive the investment sentiment in the wake of subdued growth in the factory output.

It also called upon the Reserve Bank to "pay heed" to the Index of Industrial Production (IIP) and pause interest rate hikes.

"There are enough signals of slowdown in the industrial sector now. It is high time government seriously looked into providing some investment boosting measures to revive the growth in manufacturing," Ficci President Harsh Mariwala said.

The IIP remained subdued for the second consecutive month in August, registering growth of just 4.1%. The manufacturing sector -- which constitutes over 75% of the index -- grew by 4.5%, as against 4.7% in August 2010.

CII said after a remarkable recovery from the global crisis of 2008-09, the Indian economy is facing critical challenges again.

"The RBI should pay heed to today’s data release and pause its interest rate hikes in its forthcoming policy," CII Director General Chandrajit Banerjee said.

Pointing that the slowdown in manufacturing is becoming broadbased, the industry demanded that the government should take steps to revive investments in large projects which have been stalled due to various bottlenecks.

As many as 14 out of 22 sectors have shown less than average growth for the period April-August 2011, Ficci said.

"Manufacturing growth has been falling in the last few months," it said.

PHD Chamber too expressed concern over the industry going through a rough patch for several months.

"The GDP growth in second quarter of the fiscal may fall below 7.5% as lead indicator IIP performs poorly in the same period," it said.

Chamber's President Salil Bhadari said there is a need to ensure that credit is made available to industry at reasonable rates.